Cookie Entered into a Contract with Muhammad

question 67

Multiple Choice

Cookie entered into a contract with Muhammad. Muhammad was required to pay $25 000 to Cookie, and he was entitled to have an engine modified and installed in his speedboat. Jane vicariously performed part of the contract. Which of the following statements is TRUE?

• A) If Jane performed carelessly and caused some sort of loss to the party on the other side of the contract, then the party who suffered the loss must sue Jane rather than the other person who actually signed the contract.
• B) Jane almost certainly vicariously performed on behalf of Cookie.
• C) Vicarious performance occurs only under an assignment.
• D) Vicarious performance will be recognized by a court of equity, but not by a court of law.
• E) One of the parties undoubtedly breached the contract.

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to the scale of their operations, leading to a reduction in average costs per unit as output increases.

Decreasing Marginal Product

A principle where each additional unit of input results in a smaller increase in output, after a certain point, indicating declining efficiency.

Total Cost Curve

A graphical representation that illustrates how the total cost of producing a good changes in relation to the quantity produced, considering both fixed and variable costs.

Diseconomies of Scale

Diseconomies of scale occur when a firm or business grows so large that the costs per unit increase, leading to inefficiency and higher production costs.